Microsoft, Allies Appeal Antitrust Ruling

Deadlines are nearing for Microsoft and its friends to file arguments with the U.S. Court of Appeals to save the software giant from divestiture.

Microsoft is due to file a brief with the U.S. Court of Appeals in the District of Columbia Monday. The appeals court is limiting Microsoft to a 150-page brief, but also has ordered several "friend of the court" briefs.

The Association for Competitive Technology and the Computing Technology Industry Association also scheduled to file a joint, 25-page brief Monday. The Association for Objective Law and the Center for the Moral Defense of Capitalism are also filing amicus briefs.

U.S. government attorneys representing the Department of Justice and participating states are scheduled to file their reply by January 12, 2001.

U.S. District Judge Thomas Penfield Jackson ruled last June that Microsoft has used its dominance in operating systems to quash competition. Adopting the proposal of U.S. Department of Justice prosecutors, he ruled Microsoft must be broken up into two separate companies.

One company would own the Windows operating system--subject to conduct restrictions--while the other would own applications, including the Office suite and Internet Explorer. Jackson's final judgment stays the breakup until the end of the appeals process.

Groups Bolster Microsoft

Microsoft shouldn't be split up because its business practices benefit the tech industry, say the company's allies, who are filing briefs.

In fact, many of Microsoft's challenged business practices are "nearly universal" in the industry, says a brief filed by the Association for Competitive Technology and the Computing Technology Industry Association. It argues that the District Court's proposed structural relief would "fragment the Windows operating system, retarding its further evolution and reducing the usefulness of a 'standard' that has been a key driver in making this industry so dynamic and competitive."

The District Court "misunderstood the effect of a breakup on the industry as a whole," says Vince Sampson, ACT's vice president for public affairs. Also, the court's remedy would require ongoing supervision that the courts aren't equipped to handle, he adds. His organization contends that the ruling misapplies antitrust law, and that a breakup will make PCs harder to use and will drive up consumer prices.

The arguments do not seem strong to one antitrust attorney, who compares them to the lower court's findings. Antitrust laws are supposed to correct past problems, says Robert Schneider, an antitrust lawyer with the law firm of Chapman & Cutler in Chicago. "I'm not saying they're meritless arguments, since this appellate court has taken a more liberal view of how antitrust law should be applied ... but I think (Microsoft) will still be a major player in ten years."

(See PCWorld.com's ongoing coverage of the Microsoft antitrust trial.)